At House Hearing, Iowans Warn EPA Is “Crippling Rural America”

After a summer where more broken promises about ethanol flowed than the product itself, the U.S. House of Representatives held a hearing today to discuss the lack of transparency within the EPA.

Iowa farmer Kelly Nieuwenhuis, the president of Siouxland Energy, Geoff Cooper, president and CEO of the Renewable Fuel Association and Gene Gebolys, president & CEO of World Energy, laid out evidence that, contrary to statements from the EPA and Andrew Wheeler, shows damage to the biofuels industry as a result of small refiner exemptions that left billions of gallons of ethanol out of the nation’s fuel supply.

“I’m taking time away from harvest because today’s topic is critically important,” said Kelly Nieuwenhuis, President of Siouxland Energy. “Plain and simple, the EPA’s abuse of small refinery exemptions under the RFS is crippling rural America.”

The testimonies used the EPA’s own data, public reports and statements to make the case for a more routine, transparent process with hard deadlines for decision making.

RFA President Testifies In Congress, Supports Integrity Act

The bill sets a number of parameters around the Renewable Fuel Standard, including a June 1 deadline for filing exemptions for small oil refineries looking to avoid biofuels blending standards.

H.R. 3006 saw little action after it was introduced, and the next handful of months were tumultuous for biofuels producers who watched billions of ethanol gallons exempted from blending standards by the Environmental Protection Agency.

“The bill would bring badly needed transparency to the SRE [small refinery exemption] process and provide renewable fuel producers and other stakeholders with greater certainty surrounding implementation of the RFS,” Cooper said in his testimony. “This would allow the Agency to effectively redistribute the exempted volume to non-exempt refineries and ensure the statutory requirement for renewable fuel is truly enforced and met.”

Energy And Commerce Committee Testimony

“EPA’s secretive and underhanded approach to the SRE provision in recent years has destabilized the RFS, reduced the production and use of clean renewable biofuels, increased GHG emissions and tailpipe pollution, and led to lost jobs and economic opportunity in rural America,” Cooper said.

Cooper’s testimony comes near the end of the EPA’s “public comment period,” which will culminate Wednesday with a public hearing based on feedback the agency received. The EPA will then decide how to proceed in regard to SREs, RIN prices and setting the renewable fuel volume.

“Far from ‘distorting the free market’ as RFS opponents often claim, the policy has been remarkably successful in stimulating market competition and giving consumers more choices,” Cooper said. “Simply put, the RFS ensures renewable fuels are able to gain access to a fuel market that would otherwise be closed to competition.”

Graph courtesy of Renewable Fuel Association

The last three years have been brutal for the ethanol industry in particular, due to a proliferation of refinery exemptions that dropped the demand for ethanol. That’s led to job losses in Iowa, plant closures and the fallout of losing production of by-products like low-cost feed and biodiesel.

“But EPA hasn’t been satisfied to just halt growth and directly defy Congressional intent. The agency has been taking extraordinary action to shrink the market for advanced biofuels,” said Gene Gebolys, Founder, President & CEO of World Energy. “Under previous Administrator Scott Pruitt and again under Administrator Andrew Wheeler, the agency has flooded the RIN market by handing out waivers – as one refining executive said – ‘like Halloween candy.'”

Pushing For Transparency

“When an ethanol plant goes down, the local community suffers. The idling of an ethanol plant — even if temporary — sends damaging shockwaves throughout the entire community in which the facility operates, including lost jobs, the immediate loss of a local market for corn, and a sudden drop in local corn prices,” Cooper explained, at the committee hearing in Washington, D.C.

Part of Cooper’s testimony focused on transparency with the rule making process, namely that the EPA’s decisions on refinery exemptions are made in secret. The names of companies or location of plants exempted are not published, and official exemptions are not released until the following year. Biofuel advocates believe H.R. 3006 could help create more transparency.

“EPA data now proves that EPA has not followed the DOE’s recommendations outlining which refiners qualify for exemptions or partial exemptions despite multiple EPA officials who have testified in public Congressional hearings that they follow the DOE’s advice,” Nieuwenhuis said. “Refiners also do not have a deadline for submitting an SRE request, and as a result, EPA is making decisions about RVO calculations often as much as a year after the volumes have actually been finalized.”